Advice on buying Panama Real Estate - Purchasing Panama Property

You have found an Panama property you wish to purchase what next?

Buying Property in Panama - Costs of Purchasing Panama Property

Panama Property Buyer's Guide explains the Panama real estate legal fees, legal procedures, Panama real estate purchase taxes and mortgage procedure.

In Panama, foreign citizens have many tax advantages, to include property tax exemption on new Panama real estate for up to 10 years.

The Panama Pensionado law is considered amongst the best retirement programme in the world.

The focus of Panama property is now shifting towards lifestyle alongside the investment angle; there are a number of retirement developments now on the market. Given that the tax breaks for private real estate investors in Panama are valid on any Panama property purchase, the incentives for US and even UK retirees to move to Panama are strong.

There are no restrictions for British nationals buying property in Panama, and if buying Panama real estate in the country foreigners have the same rights and protections as Panamanian residents. As an offshore haven, it is also possible to purchase Panama property through a company should you wish to form a Panama company.

There are two principal methods of buying property in Panama, which effectively translate to the freehold and leasehold systems we are used to in the UK. The 'Right of Possession' properties are primarily in areas which are protected for some natural or historical reason, and allow Panama real estate buyers to become effectively a custodian of the property for the period of the Panama real estate lease.

'Titled' properties are the most common option, which gives the real estate owner outright possession of the Panama property in question. Panama is blessed with one of the most effective and comprehensive land registry systems in the world. The system for buying a titled property is relatively simple and straightforward, and as long as real estate buyers follow the steps of the transaction, they should be protected and the sale should be easy to complete.

Once you have carried out the appropriate due diligence checks on the Panama property, you can proceed to the Promise to Purchase agreement which secures the property through a deposit of between 10 and 20 per cent. This agreement sets down the terms and final purchase price, as well as giving the buyer time to take care of their administration and checks. This agreement is recorded at the Land Registry office.

Next is the Purchase and Sale agreement, which then allows for the final transfer of deeds and the handing over of the property keys as the final amount of the sale is paid. All of the terms of this part of the transaction have been laid out in the preliminary contract.At this point all of the paperwork, fees and taxes need to be taken care of, and once the deeds have been registered under your name with the Public Registry, the property is yours.

As the property buying process in Panama is well-established and organised, it comes as little surprise to learn that there are many banks based in the country itself offering financing options for overseas property buyers. The country uses the US Dollar as currency, and operates a generally low rate of inflation. Mortgages are typically offered at up to 80 per cent LTV (Loan to Value).

Panama Real Estate Fees and taxes

There will be a cost involved in making sure your legal costs are covered so you are satisfied the contracts you are signing are legitimate and protect you fully, which will depend on the amount of time taken and the company you use. Often this can equate to five to ten per cent of the property price. The vendor is required to pay the real estate transfer tax of two per cent of whichever is higher of the purchase price or the registered property value. Registering the property deeds in your name at the public registry in Panama can take up to 10 working days.

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These guidelines are meant for guidance only and describe a straightforward real estate purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.

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